Zerodha launches two new ETFs: Nifty 100 and Nifty Midcap 150

ETFs generally have lower expense ratios compared to actively managed funds.

Expanding its investment offerings, Zerodha Fund House has launched two new open-ended, passive Exchange Traded Funds (ETFs): Zerodha Nifty 100 ETF and Zerodha Nifty Midcap 150 ETF. 

The NFO subscription window will be open from May 27, 2024, to June 7, 2024.

These passively managed ETFs track specific market indices – Zerodha Nifty 100 ETF replicates the Nifty 100 Total Returns Index (TRI), while Zerodha Nifty Midcap 150 ETF reflects the Nifty 150 Midcap TRI. This passive approach enables investors to gain diversified exposure to the Indian market without the burden of actively picking stocks.

“As India’s only passive-only fund house, we are committed to empowering investors with innovative solutions,” said Vishal Jain, CEO, Zerodha Fund House. “These new ETFs cater to investors seeking long-term capital growth and offer flexibility to participate in both large-cap and mid-cap segments of the market,” he added.

The NFOs may be suitable for investors who are looking for long-term capital growth with flexibility to participate independently in both large and mid-cap segments. Both the funds will be managed by Kedarnath Mirajkar, Fund Manager,

Zerodha Fund House.

The Zerodha Nifty 100 and Zerodha Nifty Midcap 150 ETFs offer the flexibility to invest in the entire universe of both large-cap and mid-cap segments independently.

Targeting Key Market Segments

The Zerodha Nifty 100 ETF provides exposure to the top 100 companies in India based on market capitalization, encompassing leaders across various sectors. This ETF covers approximately 69% of the free-float market capitalization. Historically, the Nifty 100 TRI has delivered a Compound Annual Growth Rate (CAGR) of 17.56% with a volatility of 21.53%.

On the other hand, the Zerodha Nifty Midcap 150 ETF offers a chance to invest in a basket of emerging companies with high growth potential. These companies have the potential to become future market leaders. This ETF covers around 15% of the free-float market capitalization. The Nifty Midcap 150 TRI has historically generated a CAGR of 18.06% with a volatility of 21.13%.

Investors can subscribe to these NFOs through leading mutual fund platforms.  You could buy or sell directly with the fund house if you have 7.55 lakh units, else you’ll have to go to the stock exchange to trade in their units.

Zerodha Fund House, being a relatively new player in the investment market (launched in November 2023), is currently expanding its product portfolio with a focus on foundational investment options. Zerodha Fund House started with tax-saving and diversification options, then added easy-access investment solutions like liquid funds and gold exposure. Now, they're expanding their core offerings by launching ETFs that track established market indices, allowing investors to participate in the growth of both large-cap and mid-cap segments of the Indian stock market.

Initial Offerings (November 2023):

Tax-saver Index Fund: This fund invests in a pre-defined index, offering tax benefits along with market exposure.

Large and Mid-Cap Fund: This fund invests in a mix of large and mid-sized companies, providing diversification across market capitalization.

2024 Expansion:

Liquid ETF (Earlier this year): This Exchange Traded Fund invests in highly liquid assets like treasury bills, offering investors easy entry and exit with potentially low volatility.

Gold ETF (Earlier this year): This ETF tracks the price of gold, allowing investors to gain exposure to the gold market without physically buying the metal.

Latest Launch (May 2024):

• ZN100 (Zerodha Nifty 100 ETF): This ETF invests in the top 100 companies in India based on market capitalization, similar to the Nifty 100 index.
• ZM150 (Zerodha Nifty Midcap 150 ETF): This ETF invests in the next 150 largest companies after the top 100 (mid-cap companies), similar to the Nifty Midcap 150 index.